United Telecom Limited’s licence has legally lapsed after the company failed to pay its renewal fee and outstanding dues by the September 4 deadline. But the Nepal Telecommunications Authority has yet to issue the formal notice confirming the cancellation. UTL’s case raises a basic question: what does a telecom licence actually give a company and what does it owe the state in return?

Here are five key questions answered.

1. What does a telecom licence actually allow a company to do?

A telecom licence is the government’s legal authorisation for a company to provide specified telecommunications services in Nepal. It allows an operator to establish and run a telecom network and provide services using resources regulated by the state, including radio-frequency spectrum.

But a licence is not a permanent right to operate. It is issued for a specified period and comes with conditions that the operator must meet.

Under Nepal’s law, a telecom service licence can run for a maximum of 25 years, but is issued for 10 years at a time. Operators must renew it before each 10-year period expires.

UTL received its basic telephone service licence on September 5, 2016. Its first 10-year term therefore expired on September 4, 2026.

2. Why does a telecom operator need a licence?

Telecommunications is a regulated sector because operators use scarce public resources and provide an essential service.

The most important of those resources is the radio-frequency spectrum, which is limited and managed by the state. An operator cannot simply start using frequencies of its choice. It needs regulatory authorisation and must pay the prescribed charges.

The licence also gives a company the legal basis to operate a telecom network and provide services to customers. In return, the operator must comply with technical, financial and service obligations set by law and the regulator.

3. How much does a telecom licence cost?

A telecom operator’s obligations go well beyond the initial licence fee.

Operators have to pay renewal fees, royalties, frequency fees and contributions to the Rural Telecommunications Development Fund, among other applicable charges.

UTL’s case shows how large these obligations can become. Its renewal fee alone is about Rs20 billion. Late-payment fees and penalties have added more than Rs3 billion, while unpaid royalties, Rural Telecommunications Development Fund contributions and frequency fees exceed Rs7.5 billion.

That puts UTL’s total outstanding dues and renewal-related payments at around Rs31 billion, according to NTA officials.

4. What happens if an operator does not pay or renew on time?

The consequences can be severe: the licence can be cancelled.

UTL applied for renewal on June 3, three months before its deadline, as required by the rules. But it did not pay the renewal fee or clear its old dues.

Under the law, a telecoms licence must be renewed within the prescribed period. Failure to do so results in the licence being automatically cancelled, after which the regulator must immediately publish a notice confirming the cancellation.

UTL’s deadline expired on September 4. Its licence has therefore legally been cancelled, even though the NTA board had not issued a formal decision or public notice as of Wednesday.

UTL says it sought permission to pay its dues in instalments and has asked the government to facilitate foreign investment, loans and a transition to 5G. NTA officials say the Cabinet has yet to decide on those proposals and that the licence cannot be renewed until all outstanding dues are paid.

5. What does UTL’s case reveal about Nepal’s telecom licensing system?

UTL’s case shows that holding a telecom licence is a privilege subject to continuing financial and regulatory obligations—not a permanent commercial right.

But it also exposes a difficult policy question.

UTL argues that delays in approving its plans to increase capital and bring in foreign investment, as well as the return of its foreign-loan application, made it harder for the company to settle its dues. It has proposed bringing in $500 million in foreign investment and offering a financial instrument worth Rs10 billion, including the outstanding dues.

The government, meanwhile, maintains that the company must first clear its obligations.

The dispute highlights the tension between strict enforcement of telecom rules and the government’s stated goal of attracting foreign investment and maintaining competition in the sector.

More broadly, UTL’s case makes clear that applying for renewal is not enough. A telecom operator must also pay what it owes—and failure to do so can ultimately mean losing the licence that allows it to operate.